There are many complex trust structures available and it can be hard to decide which one is right for your needs. Below is an outline of the most common trust structures, which may help you to determine which one is right for your situation.
Under a fixed trust, the beneficiaries have a fixed interest in the assets of the trust and a fixed entitlement to income.
An ordinary discretionary trust differs from other trusts in that the beneficiaries do not have a fixed entitlement or fixed interest in the trust funds. Instead, the trust deed generally defines the potential beneficiaries of the trust very broadly, and the trustee is then given complete discretion to determine which of these persons are to receive the capital and income of the trust and how much each of them can receive.
Although many discretionary trusts (and even some unit trusts) are often referred to as “family trusts”; a family trust is generally established by a family member for the benefit of members of the “family group”.
A unit trust exists where the trust property is divided into a number of defined shares called units. The beneficiaries subscribe for the units in much the same way as shareholders in a company subscribe for shares. In an ordinary unit trust, a beneficiary (or unit holder) is entitled to the income and capital of the trust in proportion to the number of units held. Like a company, it is possible for a unit trust to have different types of units with different rights attached.
A hybrid trust, as the name suggests, is generally a hybrid of a discretionary and a unit trust. The term “hybrid trust” is a generic term for a trust which has elements similar to both discretionary and unit trusts, and there are many different forms of hybrid trusts. Therefore, when a tax practitioner talks about a hybrid trust they could be referring to one of a number of different forms.
With so many different products available, it is important that you seek the advice of a professional to ensure you choose the right structure. To find out more information about the correct trust structure for your circumstance please contact The Quinn Group on 1300 QUINNS (784 667) or visit our dedicated website All Trust Structures and submit an online enquiry.